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Why is Closing stock valued at lower of ...

Why is Closing stock valued at lower of cost or net realisable value (market value) ?

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Closing stock is valued at lower of cost or net realisable value (market value) because of the Prudence Concept of accounting, whereby anticipated losses are accounted while anticipated profits are not.
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According to Principle of Consevatism, closing stock is vlaue at Historical cost or net realisable value ( market value ) whichever is higher.

Face value and market value

Knowledge Check

  • Closing stock in valued at

    A
    Cost
    B
    Market value
    C
    Net Realisable value
    D
    At Cost or net Realisable value, whichever is less.

  • Closing stock in valued at

    A
    Cost
    B
    Market value
    C
    Net Realisable value
    D
    At Cost or net Realisable value, whichever is less.

  • Lower of cost or net relisable value is an example of

    A
    consistency Concept
    B
    Prudence (Conservatism) concept
    C
    Realisation Concept
    D
    Matching Concept.

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    Stock is valued at

    Stock is valued at

    Valuation of stock at lower of cost or net realisable value is an example of

    Closing stock in valued at Cost or Net Realisable value (Market Value) , whichever is less because of

    Closing stock in valued at Cost or Net Realisable value (Market Value) , whichever is less because of

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